THE COMMISSIONER OF INCOME TAX-II vs. AMTREX HITACHI LIMITED

These tax appeals under Section 260A of the Income Tax Act, 1961 (for short “the Act, 1961”) are at the instance of the Revenue and is directed against the common order dated 22nd December, 2006 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench “A”, Ahmedabad in the ITA No.1269/Ahd/2003

Both the tax appeals were ordered to be admitted on the following substantial questions of law; C/TAXAP/1359/2008 ORDER “(A) Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT (A) allowing the revised claim of deduction u/s.80IA? (B) Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT (A) deleting the disallowance of consultancy fees of Rs.7,75,000/- paid to M/s. B.B. Electricals?”

For the sake of convenience, the Tax Appeal No.1359 of 2008 is treated as the lead matter.

1 The respondent-assessee had filed its return of income on 13th November, 1995 for the A.Y.1995-96, declaring total income at Rs.9,53,140/-. In the said return of income, the assessee had claimed deduction under Section 80IA of the Act, 1961 at Rs.3,22,05,867/-. During the assessment proceedings, the assessee submitted a revised claim of deduction under Section 80IA of the Act, 1961 at Rs.6,30,58,127/-.

2 The Assessing Officer, vide order dated 27th March, 1998 passed under Section 143(3) of the Act, 1961, rejected the revised claim of deduction made by the assessee under Section 80IA and limited it to the original claim of Rs.3,22,05,867/-

3 The total income as assessed by the Assessing Officer even after inclusion of disallowance of the consulting fees paid to M/s. B.B. Electricals (as capital expenditure) works out to be Rs.314.84 Lakhs.

4 The assessee, being aggrieved by the assessment order, preferred appeal before the CIT (A), who by an order dated 28th June, 1999, restored the issue of revised claim of deduction to C/TAXAP/1359/2008 ORDER the file of the Assessing Officer for being examined afresh.

5 It appears that the Assessing Officer passed a fresh assessment order under Section 143(3) read with Section 250, of the Act on 28th March, 2002, thereby again rejected the revised claim of deduction made by the assessee.

6 The assessee went in appeal before the CIT (A). The CIT (A) by an order dated 15th January, 2003 directed the Assessing Officer to accept the revised working.

7 The Revenue, being dissatisfied with the order passed by the CIT (A), preferred appeal before the Income Tax Appellate Tribunal. The Tribunal dismissed the appeals preferred by the Revenue on the ground that as the assessed income is only Rs.314.84 Lakhs, the revised claim made by the assessee would be of no consequence and the objection raised by the Revenue would be academic.

8 Being dissatisfied with the order passed by the Tribunal, the Revenue has filed these appeals.

It appears from the materials on record that the Tribunal has rightly held that the appeal has become academic in view of the fact that the total income of the assessee for the A.Y. 1995-96 even after inclusion of the disallowance made by the Assessing Officer was Rs.314.84 Lakhs, against which the claim under Section 80IA allowed by the Assessing Officer was at Rs.322.05 Lakhs. The Tribunal also considered that even the CIT (A) has also allowed the revised claim of deduction made by the assessee under Section 80IA of the Act, 1961 at Rs.630.35 Lakhs keeping in mind the fact that the income of the assessee prior to deduction under Section 80IA of the Act C/TAXAP/1359/2008 ORDER was Rs.314.84/-. Lakhs. Therefore, the issue of revised claim made by the assessee of Rs.690.35 Lakhs is of no consequence.

Similarly, for the A.Y.1997-98, the assessee's total income prior to deduction under Section 80IA of the Act, 1961 stands assessed at Rs.190.68 Lakhs. However, the eligibility to deduction under Section 80IA stands confirmed by the Assessing Officer at Rs.354.02 Lakhs. Therefore, the consideration of revised claim of Rs.487.39 Lakhs is no consequence as the assessed income is much less than the eligibility under Section 80IA of the Act, 1961. 7. The Tribunal has therefore rightly dismissed both the appeals qua Question (A) on the ground that the same is academic in nature. We, therefore, decline to answer Question (A).

With regard to Question (B) pertaining to disallowance of consultancy fees of Rs.7,75,000/- paid to M/s. B.B. Electricals, both, the CIT (A) and the Tribunal have given concurrent findings of fact and, hence, we answer Question (B) being factual in favour of the assessee and against the Revenue.

In the result, both the tax appeals fail and are hereby dismissed. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) Vahid